The backbone of a California business can be its relationships with other parties, including clients, consumers, vendors, partners and shareholders. And these relationships may be defined by a contractual agreement.
Unfortunately, contract disputes can arise. Parties may disagree on interpretation or fulfillment, or there may be breaches that require resolution. These situations can become messy, so business owners would be wise to avoid four common mistakes.
- An invalid contract-There are many elements of a contract that must be in place to ensure it is legally valid. This includes consideration, consent and acceptance by parties capable of entering into a contract. Without these elements, all or parts of a contract may be unenforceable.
- Neglecting to put the contract in writing-The success of a business may depend on word-of-mouth. However, when it comes to contracts, it is prudent to put things in writing. While there are some types of contracts that California law does not require to be in writing, doing so can eliminate many potential disputes.
- Unclear terms-It is important to be clear in contracts. Leaving loose ends or items open to interpretation can trigger contract disputes when parties disagree on what to do. Contracts can provide critical direction and information that guide parties throughout the life of the agreement, so it is important to use clear, appropriate language.
- Failing to read and understand the agreement-Though many may not admit it, people don’t always read or fully understand contracts before they sign them. Unfortunately, this could be detrimental to a business, so it is vital that owners take time to review and understand the agreement. If there are any questions or concerns, consulting an attorney can help to clear things up.
Avoiding these common mistakes can make it easier for businesses to operate without confusion or conflict.